Q1 Paper Outlook — Market Taking Stock
Changes in buying patterns have put the market on a thinner edge with regard to the domino effect, however. Over the last few years, many merchants and printers have switched to just-in-time inventory management and have learned to operate on much leaner inventory pipelines, Miller points out. As long as buyers don't stray too far in their paper inventory management practices, the combination of sensible demand levels and greater stability on the supply side should minimize the market swings, he says.
Getting caught without paper may be a disaster, but overstocking also presents a risk for printers, points out Donald Samuels who, as one of the other managers of Pictorial Offset, has primary responsibility for sales and marketing. "Just as fast as it tightens, the market can loosen," he cautions. "If you build your inventories to deep levels and then the price collapses, you are stuck with expensive paper that must be sold to clients at a discount."
Trying to gauge market swings traditionally has come down to little more than taking a best guess, given the number of variables and the difficulty in predicting human nature. While acknowledging that conditions were different, Samuels notes that the market took 14 to 16 months to fully work its way out of the restriction in paper supply that started in 1995.
Pictorial has tried to get feedback from its clients about their future paper demand, the sales and marketing exec reveals, but the current business climate makes it difficult for them to make marketing predictions, as well. "Nonetheless, we have been building up our paper inventory to protect our clients," he says.
Could the answer to paper supply and price concerns be found in an industry standards initiative called papiNet? Quad/Graphics is among the major North American printers investing time and money to find out.
